Morning Notes – Thursday May 4, 2017

Directional Bias For The Day:

  • Futures are higher
  • Moving up since 10:30 AM on May 3; at the upper limit of a horizontal channel on 30-minute chart
  • Odds are for an up day; watch for break below above 2384.75 for change of fortunes
  • Key economic data:
    • Unemployment claims – at 8:30 AM
    • Prelim Nonfarm Productivity and Prelim Labor Cost – at 10:00 AM

Markets Around The World

  • Markets in the East were mixed – Shanghai, Hong Kong and Sydney were lower; Mumbai and Seoul were higher; Tokyo was closed
  • European markets are higher
  • Dollar index is down; USD/JPY, GBP/USD and EUR/USD are higher
  • Commodities are lower
  • 10-yrs yield closed at 2.309% on May 3 up from May 2 close of 2.296%; 30-years closed at 2.955% down from 2.982%

Key Levels:

  • Critical support levels for S&P 500 are 2379.75, 2376.17 and 2369.19
  • Critical resistance levels for S&P 500 are 2394.49, 2398.16 and 2400.98
  • Key levels for eMini futures: break above 2390.25, the high of 2:00 PM on May 1, and break below 2384.75, the low of 3:00 AM


  • Pre-NYSE session open, futures price action is to the up side – at 7:30 AM, S&P 500 futures were up by +6.75; Dow up by +59.00; and NASDAQ by +20.25
  • On Wednesday, at 4:00 PM, S&P future (June contract) closed at 2383.50 and the index closed at 2388.25 – a spread of about 4.75 points; futures closed at 2383.25 for the day; the fair value is -0.25

The trend and patterns on various time frames for S&P 500 are:

  • Confirmed Uptrend
  • Uptrend resumption since Feb 08, 2016 after a pull back of -15.2%
  • Candlestick for the last week, Friday April 28, was a  green candle, with no lower shadow and a up gap from previous week;
  • An up week – third in in last five weeks; sixth in last ten weeks
  • Broke above a down sloping flag (2378.36), which has bullish implications;
  • Broke above a down-sloping flag on November 14, 2016; first target of 2285.92 and second target of 2363.14 are achieved
  • Last swing low, 2083.79, was the low on November 4, 2016
  • Above 39-week SMA and 89-week SMA
  • Confirmed uptrend, though pulling back
  • A near doji candle with a longer lower shadow; break above 2389.82 will be bullish, break below 2382.36 bearish
  • Broke above a down sloping flag on April 24; broke above 2378.36, which is bullish; found resistance at flag-pole high of 2400.98; the target will be near 2650
  • Move above an up-sloping channel since December 27 still relevant
  • Above 100-day, 200-day, 50-day SMA/EMA and 20-day EMA
  • Last swing low 2263.62
  • Uptrend under pressure
2-Hour (e-mini future)
  • Drifting higher since 10:00 AM on May 3; big green candle at 4:00 AM, European session open
  • Within a narrow range since 10:00 AM on April 25 – high 2389.25 and low 2382.25;
  • Breaking above a descending triangle; hugging the upper limit since 8:00 AM on May 1; a break above 2388.50 is critical for up move; lower limit break is near 2377.00
  • Uptrend since 8:00 PM on April 16; higher highs and higher lows
  • Above rising 50-bar EMA and rising 20-bar EMA
30-Minute (e-mini future)
  • Moving up since 10:30 AM on May 2
  • At the upper limit of a horizontal channel – high 2388.75 and low 2375.50 – target neat 2401.00
  • Within a narrow range since 4:00 AM on April 26 – high 2386.50 and low 2381.25
  • The descending triangle on 2-hour time frame is more like a down sloping flag on 30-minute; a break above 2388.50 will complete the flag break
  • Above rising 50-bar EMA and rising 20-bar EMA

Previous Session

Major U.S. indices closed mostly lower on Wednesday May 3. Dow Jones Industrial Average was an exception. Most indices made a doji or near-doji pattern. S&P 500, NYSE Composite and Wilshire 5000 Total Market Index had larger lower shadows.

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